Bitcoin has had an overall positive performance as of late, continuing the appreciation trend that started in September 2023. The month of February brought particularly impressive gains for the leading crypto, as its price surged past the $60K threshold, hitting a yearly high of over $64,000. This means Bitcoin has recovered much of the value it has lost in the aftermath of the latest crypto winter and is now within short distance of its record high of $68,789 set in November 2021.
As expected, the price rise brought a renewed wave of excitement and enthusiasm in the crypto market, with many analysts stating this could be the beginning of a major bull run. For those looking into how to buy Bitcoin, keeping up with price movements and understanding their implications is crucial for making sound financial decisions.
But if you’re even remotely familiar with how things work in the crypto industry, you know all too well that spotting the signs and interpreting them is not as easy as some might think. The market’s inherent volatility caused mainly by a multitude of external factors and less by crypto fundamentals is making it difficult for analysts to cast accurate predictions about the trajectory of any given crypto, and Bitcoin makes no exception.
This makes many people wonder if the optimism that has pervaded the market after Bitcoin’s staggering ascent and the positive predictions that came after are indeed justified or just a classic case of fleeting hype.
The crypto king is making rapid progress
If there ever was a crypto that had the power to bounce back after a long and harsh winter and change the course of the crypto industry, that would be Bitcoin. So, it’s not in the least surprising that Bitcoin is once again back from its ashes and leading the crypto market towards new heights. In fact, that’s exactly what the world expects from the oldest, largest and most popular digital currency in existence.
Bitcoin started the year at $42,000 and went on to cross the $64,000 mark on February 28 for the first time in over two years. This means that the leading coin is making rapid progress toward its all-time high. Moreover, if Bitcoin continues its ascending trajectory, it could top its former record before the halving takes place.
Immediately after surpassing the $60K price point, Bitcoin experienced a correction that saw its value plummet back to $59K. Many assumed that the asset would remain stuck in this price range for a while longer, but Bitcoin proved skeptics wrong as it soon resumed its hike and started consolidating above $60K. The next resistance level that Bitcoin is targeting stands at $64,000. Should the original crypto break this threshold as well, there’s only a short stride separating it from the historical $68K record. With the odds currently in Bitcoin’s favor, this scenario could play out sooner than expected.
What to make of Bitcoin’s rise?
It’s understandable that Bitcoin’s price rally caught the public’s attention and painted a rather positive outlook for the asset in people’s minds. But is this really such a key moment in Bitcoin’s evolution or are we making a fuss over nothing? Is Bitcoin going to maintain its bullish momentum and usher in a new era of growth or is a price correction waiting around the corner?
In order to make sense of Bitcoin’s upward movement, we have to look at the factors that have contributed to it. Most of the hype surrounding Bitcoin over the past few months can be attributed to the optimism caused by the approval of the 11 spot Bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission back in January. These funds give institutional investors the possibility to trade Bitcoin at its current price as opposed to futures ETFs which imply trading derivative contracts linked to Bitcoin’s value.
Although they were off to a rather slow start, spot Bitcoin ETFs managed to attract over $7.7 billion in net flow since launch. Therefore, their emergence represents a major milestone for Bitcoin and the entire crypto market, providing more accessibility and legitimacy to this novel and controversial asset class.
Another decisive factor that is stirring things up in the crypto market and fueling Bitcoin’s rise is the upcoming halving. As you may know, Bitcoin is scheduled to undergo an algorithmic reduction of its mining reward by 50% every four years. This event is known as the halving and its purpose is to maintain scarcity by gradually diminishing the rate at which new coins get released into circulation. The effects that halving events have on Bitcoin’s performance have been documented and studied, and a historical pricing pattern has been noticed in all of them.
After every halving, the supply decrease caused the price to go up, leading to higher demand and eventually triggering a bull run for Bitcoin. Although one cannot ignore the existence of other external forces influencing Bitcoin’s trajectory, the halving is believed to have the biggest impact on the asset’s price performance.
If we put these two factors together and place them in the wider context of macroeconomic trends, analysts’ argument for a bull market in 2024 seems quite reasonable. However, one should not forget that Bitcoin is no stranger to price corrections either. Although digital assets enjoy more popularity and acceptance than ever before, the market is still highly volatile and there’s no guarantee Bitcoin is going to remain steadfast in its growth.
Wrapping up
As the year progresses, the outlook for Bitcoin and the altcoin keeps improving, with predictions of an impending bull run bringing a wave of optimism and making investors and traders reassess their strategies. Nevertheless, crypto veterans know that even when everything seems to go smoothly, caution remains the best policy in the crypto market.
